Hotel Location Research Articles

Competitive Dynamics and Pricing Behavior in US Hotels: The Role of Co‐location

Which hotels benefit from locating next to competitors? In this study of 14,995 hotels we provide evidence of both a price benefit and a detriment for specific hotels that co‐locate next to other hotels. Relying on the theoretical framework of agglomeration economics, the results reveal that hotels that co‐locate in the same geographic cluster with the highest quality segmented firms (luxury hotels) accrue a price premium compared to competitors in markets with larger proportions of lower‐segmented competitors. The strongest price premiums were obtained by midscale hotels without food and beverage in clusters with large proportions of luxury and upscale hotels. Similarly, high‐end hotels that pursue differentiation strategies experience price erosion when they are in the same geographic location as lower‐end hotels. Luxury hotels experienced the greatest price erosion when they operate in locations with large proportions of economy and midscale hotels. The paper concludes with a discussion of the implications of these findings for competitive dynamics and hotel location decisions.

The innovator's non‐dilemma: the case of next‐generation lithography

AbstractPrevious studies have analyzed how incumbents may falter when they focus too narrowly on satisfying the needs of current customers at the expense of pursuing innovations that will ensure future market leadership. This paper examines this ‘dilemma’ faced by incumbents and considers cases where incumbents do spearhead innovation on the technology frontier thus enabling future product generations. In particular, we examine the case of the semiconductor industry confronting a technological discontinuity in the production of chips. In anticipation of a discontinuity in the lithography production module, leading firms in the semiconductor industry have initiated next‐generation lithography (NGL) projects. These projects have exhibited an unprecedented level of horizontal and vertical cooperation. Our research analyzes how such cooperative research and development (R&D) programs allow incumbent innovators to mitigate four areas of uncertainty—leadership, preemption, performance, and industry adoption. We adapt a Hotelling location model to demonstrate the tension between mitigating these uncertainties through interfirm cooperation and the possibility of increased downstream competition. Such tensions have influenced cooperation within and across the R&D consortia pursuing NGL led by IBM, Intel, and Bell Labs. Copyright © 2008 John Wiley & Sons, Ltd.

Market Segmentation: The Role of Opaque Travel Agencies

This paper investigates the role of discount travel agencies such as Priceline and Hotwire in the market segmentation of the hotel and airline industries. These agencies conceal important characteristics of the offered services, such as hotel locations or flight schedules. We explicitly model this opaque feature and show that it enables service providers to price discriminate between those customers who are sensitive to service characteristics and those who are not. Service providers can profit from such discrimination despite the fact that the opaque feature virtually erases product differentiation and thus intensifies competition. The reason is that the intensified competition for less sensitive customers enables service providers to commit to a higher price for more sensitive customers, which leads to higher profits overall. This explains why airlines or hotels are willing to lose the advantage of product differentiation and offer services through discount travel agencies.

A fuzzy multi-criteria decision model for international tourist hotels location selection

The main purpose of this paper is to present a fuzzy multi-criteria decision making (FMCDM) model for international tourist hotel location selection. In this article we created 21 criteria for selecting the international tourist hotel location acquired from literatures review and practical investigations. And the methods of fuzzy set theory, linguistic value, hierarchical structure analysis, and fuzzy analytic hierarchy process are used to consolidate decision-makers’ assessments about criteria weightings. Finally, an empirical study for identifying the international tourist hotel location selection in Taiwan is conducted to demonstrate the computational process and effectiveness of FMCDM proposed by this paper.

RELATIONSHIP BETWEEN EMPLOYEE TURNOVER AND THE LACATION OF HOTELS: THE CASE OF KUŞADASI AND İZMİR IN TURKEY

Turnover rates and reasons vary significantly within and without organizations. Employee turnover in the hospitality industry often averages as much as 200% to 300% per year. Statistically speaking, this means that the entire staff of a hospitality operation turns over two to three times per year (Woods,1997: 141). Hotel industry is a labor-intensive industry, and labor costs on goods and services produced are very high. It means that labor expenses have an important share on total expenses (almost 40%). In order to serve quality goods and services with a reasonable price, and compete with their competitors, hotel administrations must control the labor expenses and satisfy their employees, and decrease undesired employee turnover. This study discusses the importance of employee turnover for hotel administrations and determines the reasons, differences and relationships between employee turnover and the location of hotels.

A note on the Hotelling principle of minimum differentiation: Imitation and crowd

This paper investigates price competition in the Hotelling location model with linear transportation costs when consumer preferences are affected by the number of consumers shopping at the same store. A consumption externality permits us to consider the imitation and the congestion effects which are opposite forces at work. The coexistence of the two effects confers new validity to the principle of minimum differentiation as it was in the original Hotelling model. I show that firms do not need to set apart in order to earn higher profits. The results show firms endogenously choosing to locate in the center of the interval sharing the market with positive prices.

On the Hotelling Principle of Minimum Differentiation: Imitation and Crowd

This paper investigates on price competition in the Hotelling location model with linear transportation costs when consumer preferences are affected by the number of consumers shopping at the same store. A consumption externality permits to consider the imitation and the congestion effects which are opposite forces at work. The coexistence of both effects confers new validity to the principle of minimum differentiation as it was in the original Hotelling model. I show that firms do not need to set apart in order to earn higher profits. The results show firms endogenously choose to locate in the center of the interval sharing the market with positive prices.

Hotel selection: When price is not the issue

To maintain desired room occupancy rates, one of the common strategies a hotel will normally adopt is cutting price. This trend greatly affects a hotel's profits and may result in the deterioration of a hotel's status. Many hotels consequently discover new competitors and fail to retain guests in the long run as the guests tend to be sceptical about the level of the advertised price reduction. This implies that hoteliers need to have a better understanding of how such factors beyond ‘price’, such as the quality of their services and their facilities, influence the booking behaviour of customers. This study, which surveyed 573 Frequent Individual Travellers (FITs) to the Hong Kong SAR, found that beyond ‘price’, ‘convenient hotel location’ and ‘good service’ were the key factors influencing FITs in their final selection of hotel. Business travellers tend to place more emphasis on their previous hotel experience; good service; convenience and company recommendation; whereas leisure travellers and those with a lower level of education valued travel agents’ recommendation. Repeat male visitors and western travellers valued good hotel reputation, while the impact of subjective norms on big spenders was high.

Hotel location in tourism cities: Madrid 1936–1998

To determine how the positioning of new hotels is affected by the distribution of similar incumbent competitors, this paper investigates geographic location, price, size, and services. With data on all 240 hotels operating in the city of Madrid between 1936 and 1998, a model of geographic and product location at the time of the hotels’ foundings is estimated based on the above mentioned variables. These are simultaneously determined and contingent upon the changing socioeconomic and urban circumstances of the city. The findings suggest that agglomeration occurs only among differentiated establishments. In the balance between agglomeration and differentiation strategies, particularly significant is the trade-off between price and geographic dimensions.

The Geography of Hotels in Cities: An Empirical Validation of a Forgotten Model

ABSTRACT In 1968, Yokeno published a model of intra-urban location of hotels; he did not validate the model empirically. This paper argues that a hotel located in the centre of the city will charge more for a room than a hotel of the same category that is situated in the periphery. In addition to other indicators, this hypothesis was tested using the Average Room Rate (ARR), which is the average annual price paid for a room in a hotel (excluding breakfast and extras). The empirical investigation was carried out in Jerusalem and revealed that the ARR of hotels in the centre of a city's Main Tourist District is significantly higher than that of hotels located in more distant areas. The principal reason for this is that centrally located hotels cater to a higher percentage of individual tourists, who are willing to pay more for a central location. Hotels on the periphery, on the other hand, tend to cater to organized tour groups, for whom location is less of an issue. As individual tourists are charged more per room than tour operators the result is a considerable disparity in the hotels' ARR.

Urban Size and Functions : An Analysis of Hotel Location in Regional Cities, Seen from the Example of Higashihiroshima City

Urban Size and Functions : An Analysis of Hotel Location in Regional Cities, Seen from the Example of Higashihiroshima City

The impact of gasoline price fluctuations on lodging demand for US brand hotels

Analyzing US brand hotels, over a 13-year period, this study provides empirical evidence of a significant negative relationship between gasoline prices and demand for certain lodging products, controlling for economic factors (i.e. gross domestic product and population density). Applying principles from microeconomic demand theory to the literatures on gasoline price elasticities, consumer demographics and lodging demand, a set of hypotheses were devised to test the relationship between gasoline prices and lodging demand for specific hotel locations and price segments. Using fixed effects models, the results reveal that lodging demand decreases as gasoline prices rise in all segments except upper-upscale and all locations except urban areas. Hotels in midscale without food and beverage and economy market segments, in resort, suburban and highway locations, exhibit the greatest association between gasoline price shifts and demand. Implications of these findings are discussed for both hospitality research and practice.

Instrumentatio nnotes - The accuracy of the global positioning systems

In certain cases, due to such high precision of geographical position estimation, there problems connected with the accuracy of systems for the projection of the globe convex surface to the two-dimensional surface of a chart emerge. When using DGPS, one should pay closer attention if the chart datum is compliant with GPS. Although DGPS can increase the precision of the SPS several times, the accuracy improvement of the PPS is very limited. Satellite navigation systems used for non-military purposes found their application mainly in maritime and aerial navigation; however, recently they started to invade inland applications. Expensive cars are being equipped with such systems, which transmit signals from remotely controlled transmitters hidden in vehicles in case of theft. Today, one can buy an inexpensive GPS or DGPS receiver capable of displaying position and travelled distance on a map of any selected region, in selected scale and with a variety of useful information such as location of hotels, restaurants, museums, or gas stations. Many developed countries are beginning to implement GPS receivers equipped with an interactive vehicle communication system that connects them with traffic control centres.

Individual Hotel Enterprises and the Influence of the Strategic Choice Model

ABSTRACT The aim of this study was to determine what effect if any, did factors such as location, environment, and the operating arrangements, have upon the choice of a hotel's competitive strategy? The results found that these factors appeared to have little or no significant effect on the competitive strategy pursued by individual hotel enterprises. The findings indicated that hotel managers don't use a strategic-choice model when pursuing a particular competitive strategy; moreover, a hotel's location and operating arrangements appear to play no significant part in strategy development at the individual hotel level.

FIVE-STAR TREATMENT? E-MAIL CUSTOMER SERVICE BY INTERNATIONAL LUXURY HOTELS

This research used a typical e-mail query to investigate customer service by 491 properties from 13 international hotel chains. These five-star hotels had difficulty providing prompt, accurate, and timely e-mail responses to their customers. The results suggest significant differences in e-mail customer service, based on hotel location and the size of the hotel chain. The poor responsiveness and quality by many hotels illustrate that better e-mail policies and training would give hotels an immediate competitive advantage via improved e-mail customer service. The article closes with practical suggestions to improve e-mail customer service and future research avenues for academics.

Características y localización de la hostelería en la Comunidad de Madrid

This article analyses the characteristics, number and localisation of hotel resources in the Autonomous Community of Madrid throughout the last decade (1992- 2002).In this period, the Community has experienced a remarkable increase of hotel premises due to the following factors, among others: the relocation of economic activities from inner capital locations to adjacent counties, the enlargement of public communication networks, the exploitation of natural and cultural heritage, new leisure offers linked to economic changes and the UE financial investments in rural areas. As a result, quality standards have risen up outstandingly and, more important yet, new hotel locations have reached out (i) the metropolitan counties immediately adjacent to the urban core, (ii) the northern mountain fringe and (iii) the SW quarter.

Uses of the Internet in the global hotel industry

This article discusses a study carried out among the membership of Global Hoteliers, an organization of executives in the international hotel industry. The study looked into the uses of the Internet, such as the World Wide Web and E-mail, and at any organizational and geographical influences on those uses. Hotel size, star rating, and hotel type were among the organizational factors which had some significant effect on certain aspects of the information hotels posted on the Web and on the use of E-mail. Similarly, the geographical location of hotels was also found to have a significant effect. The similarities and differences of the use of the Internet among global hotels call for future research into the relationships between market segmentation, organizational buying behavior, hotel operations and information technology.

Determinants of the Price of German Tourist Packages on the Island of Mallorca

The prices of tourist packages offered by various tour operators are not directly comparable, given the diversity of their characteristics. The services contracted differ in volume, quality and location. This work studies the vacations offered on the island of Mallorca by a sample of German tour operators, analysing the structure of the hotels contracted and the price distribution of tourist packages. This last variable is described taking as essential references the tour operator, hotel star rating, type of board and hotel location.

Urban hotel development patterns in the face of political shifts

This paper discusses changes in the spatial pattern of tourism accommodation in Jerusalem in the past 150 years. This is done with particular reference to urban development and political shifts during this period and in respect to various theoretical models relating to the location of hotels in urban areas. The time frame of the paper is divided into four chronological periods according to the main geopolitical changes in the city: the end of the Ottoman period; the period of the British Mandate; the city divided between Israel and Jordan; and the city unified under Israeli sovereignty.

Towards a Theory of Intraurban Hotel Location

In his seminal paper on the urban land market, Alonso notes that when a purchaser acquires land, he acquires two goods (land and location) in one transaction, and a single payment is made for the combination. Thus it is possible to trade off a quantity of land against location, the principle underlying Alonso's bid-rent analysis. It is argued that the Alonso model of bid-rent analysis is still applicable to those types of economic activity which display a hierarchy of use in terms of distance from the city centre. The concern here is with hotel location, and we develop a model of the Alonso type which casts light upon the intraurban location decisions of hotels.